Wednesday, March 20, 2013

Covering up the truth - Quis custodiet ipsos custodes? How the Banking Commission is denied access to important evidence on banking crime!

The Parliamentary Commission on
Banking Standards issued a call for evidence in July2012 .

The terms of reference of the Commission were to consider and
report on:

a) professional standards and culture of the UK banking
sector, taking account of regulatory and competition investigations into the
LIBOR rate-setting process;

b) lessons to be learned about corporate governance,
transparency and conflicts of interest, and their implications for regulation
and for Government policy;

In the wake of the LiBOR scandal, the
Commission was set up to be led by Andrew Tyrie, who also chaired the Treasury
Select Committee (TSC). He said: "Recent scandals have shown how much we
need higher standards in banking … perpetrators of wrongdoing should be
held fully accountable..."

Since that day, the
Commission has sat virtually every week, and has received a vast amount of evidence
from a wide variety of informed sources. I have watched many of the hearings on
the Internet, and the Chairman has repeatedly asked witnesses the same
questions.

"...'Why has
no-one been prosecuted for financial crimes committed by the banks and
financial entities which have been so prominently in the news, and what
proposals are being made to rectify this situation so we can get to the truth
in the future..."?

It is the tradition
of such Commissions to call for evidence from the public and interested bodies,
and to invite selected persons with special knowledge to come and give live
evidence to the Commission.

As you would expect,
a wide cross section of interested parties were invited to present evidence,
and just about anyone in the banking, regulatory and academic establishments
submitted evidence and many of them were invited to give evidence. Their names
and the details of their evidence are attached in various addendums on the
Commission's web pages.

I too submitted
evidence to the Banking Commission on 22 August 2012 in a document entitled;

"...Response to the Parliamentary
Commission on Banking Standards - Professional Standards of the UK Banking Sector..."

The document was
submitted in a formal academic style and its Summary laid out the terms of the
evidence which was being submitted. It stated;

"...This paper makes the assertion that the
British Banking Industry has become identical with an Organised Criminal
Enterprise...

It examines the nature of the criminogenic personality and
determines the kind of person who is more likely to break the criminal law and
why.

It asserts that this state of affairs has been allowed to
develop because of the failure of the regulatory process to develop the
necessary skills and knowledge of the conduct of criminals to enable them to
deal professionally with the misdeeds of the banking sector and the reluctance
of the regulators to use their statutory powers effectively.

It defines why there needs to be a far greater degree of
criminal prosecution brought against financial practitioners and explains why
such processes are among the only penalties that such practitioners truly fear..."

I had deliberately focused on these topics because I was only
too well aware that they would be highly unlikely to be covered by anyone else
providing evidence to the Commission.

What follows is an exact reproduction of the facts as they
happened to me over this issue.

My evidence was submitted in time together with the relevant
covering letter requesting that I be permitted to attend and give evidence in
person.

And I waited.

Then, in or about late 2012, when the Commission was in full
swing, and having heard nothing from the Commission, I rang Ian Fraser, who
will be known to many of you and asked him if his evidence had been accepted.
He told me that he had been forced to ring the Office of the Commission and
complain because his evidence did not appear in the list of submitted written
evidence. He agreed that his evidence had subsequently been included in a
second list of written evidence and published on the website, but only after
had had been forced to complain!

I searched the website but could uncover no evidence of my
evidence appearing in any list, so I rang the office of the Commission.

I spoke to a young woman and explained my position and asked
her why my evidence had not been acknowledged on the website.

She said she would look, and when she returned she stated
that they did not appear to have received any evidence from me. I expressed
great surprise and made it clear to her that I had submitted evidence in time
and in due manner and that nothing had been returned. I asked her to look again
or enquire of someone else who perhaps might have had more knowledge of the
workings of the system. She agreed to do so and said she would ring me back
within 48 hours.

Needless to say she did not ring back.

Beginning now to smell a rat, (or at least a Crown Servant),
I rang again, and this time I spoke to a young man. I outlined my concerns and
explained that I had already spoken to the young woman, and he almost
immediately said he would go and look again for my submissions.

Now, I imagine that all such submissions are entered on to a
database and it should not take long to check. When the young man returned
quite a few minutes later, he re-confirmed that no evidence had been received
from me and that in any case, not all evidence received was selected for use by the Commission. However he said he would
ask his manager and get back to me later with an answer.

He did not call back.

Having given evidence to a previous Parliamentary
Sub-Committee for Trade and Industry, I was aware that all evidence received is
logged and recorded, even though, truthfully not all of it may be relevant, and
if so, then it is not used, but it is recorded.

By now, the rat had grown in proportion and I was beginning
to smell that most typical of British civil (government) servant aromas, the
odour of 'cover up', of 'official obfuscation', of 'sweep under carpet time' and
having smelt that pong before many times, I knew it was pointless continuing to
ring the Commission Office.

So I wrote to Andrew Tyrie, the Chairman of the Committee!
His office told me that I could email him but in his capacity of Chair of the
Commission. I sent the following email on 22nd January 2013;

"...Dear Mr Tyrie,

I am writing to you in
the hope that I can alert you to evidence which I had hoped would be allowed to
be given to the Commission on Banking Standards.

I recently watched the
hearings on 17th January 2013 when questions were asked by yourself about the
reasons why no-one has been prosecuted or convicted for criminal offence
arising out of the recent banking scandals.

I submitted evidence to
the putative Commission back in August 2012 in a paper which dealt with issues
of banking culture, workplace standards, conduct of business and treatment of
clients, and I sought to draw comparisons between their similarities to organised
criminality.

I raised issues of ways
in which truly effective sanctions can be imposed on bankers who break the
criminal law (as indeed so many of them have done), and I sought to set out an
explanation for their criminogenic culture.

This arises out of
academic work I have completed in recent years, as well as on the basis of my
many years in the enforcement of financial legal issues, as a lawyer, a former
Metropolitan Police Detective, a financial regulator, and a financial legal
consultant.

I spoke to the
Commission office today because I had received no response to my submissions,
and I was told that they did not believe my submissions had been selected for
consideration. They are subsequently checking this fact.

I am aware that my
submissions were very hard-hitting and indeed, possibly unpalatable to many,
but my many years of experience in dealing with financial crime had made me
realise that what bankers and their apologist bodies will say in public, and
what they will really do in private and away from public gaze, are two entirely
different things.

I have very strong views
on banking criminals and the way in which they should be treated, as well as
the ways in which this country has been so badly served by the actions and
responses of its financial regulators in recent years. I can give direct
evidence of an investigation I was commissioned to undertake for H.M.Treasury
into money laundering in the City of London, and the attitudes of the FSA
towards dealing with its effects, as far back as 2001, and I can assure you
that very little has changed in the interim.

I am very concerned that
your Commission might not have the chance to at least be appraised of the
content of my findings prior to your final deliberations. I should like to give
evidence to you because I believe it would be very valuable, but in the absence
of any information as to whether or not your Committee will even see the
evidence I submitted, I am at a loss to know how to proceed, apart from taking
the responsibility to write to you directly..."

I received no
acknowledgement of this email, but I did not expect any, as it would be
difficult for Andrew Tyrie, as Commission Chairman to make any comment on the
record.

I left the matter for a
week and then I rang the Commission office again and spoke again to the same
young man.

'...Oh Mr
Bosworth-Davies, I was just about to call you. Your evidence has just been
discovered, it was here all the time. My Principal is deciding how to deal with
it, but she's in a meeting right now, but I will call you back, when I know what she intends to do with your evidence,
but don't hold your breath...'

Quite what he meant by
that I cannot say, but yet again, he did not call back. So I rang again the
following day.

'...Yes, your evidence is
still being appraised upstairs by one of our senior people, and promise I will
call you back...'

This time, he did, at
about 6.15pm on a Friday evening.

'...Your evidence will
be circulated to the Commission and they will all have a chance to read it.
However, my principals want to redact certain parts of the report before it is
published...'

'...Which parts...' I
asked.

'...Well, the parts
where you call the banks criminals, we think that the use of such words might
upset them, might send the wrong impression, particularly as no-one has been
convicted of any crime...'

'...But those are the
facts, you can't escape them...' I said. '...That is the whole point of the
Chairman's repeated question, they want to know why no-one has been convicted
of criminal offences...Using the phrase criminal doesn't have to mean they have
been convicted...If a bank launders money like HSBC has done, then they are
money launderers. .If they were to be convicted in court then they would be
convicted money launderers...so why do you need to redact anything from the
report...'

He had no answer.

I am now informed that
my evidence has been circulated around the Commission and it will be ultimately
published on the website. I have no means of knowing whether this is true or
not, we shall have to wait and see!

What truly infuriates me
about this whole episode is the way in which civil (or government) servants are
the ones to decide what evidence is submitted to such a Parliamentary
Commission. These non-elected apparatchiks decide what will and what will not
be seen by the Commissioners.

By what right do they
give themselves these powers, by what possible provision do they have the right
to determine what the Commissioners will and will not see or read. What right
do they have to redact evidence if it is given in a lawful fashion, just
because it might be irritating to one or more of those being reviewed.

Perhaps most
importantly, how much other evidence has been quietly marginalised and pushed
to the side and quietly forgotten, evidence which might have contained
important information which the Commission might have usefully received, but
which they have been denied by these bureaucrats, either because it is inconveniently
positioned for the banks, or is just too awful to contemplate.

The Commission staff
have knuckled their foreheads, and bowed down to the interests of the banks and
their apologist agencies, the Big 4 Consultancies and all the other members of
the institutional Great and Good, but, as in my case, they have censored the
right of others to bring their honestly-held and properly acquired evidence to
the Commission.

I am aware that my
evidence was hard-edged, it was irritating, it was not happy reading and it
made some very unpleasant allegations, all of which I stand by. My evidence was
based on long experience of the financial markets and based on years of
involvement with the financial sector and it deserved to be considered with
greater consideration. How else will we ever alert our political representatives
to what is really going on if all they ever see is what their apparatchiks want
them to see, because it suits their perverse version of events. I have no doubt
if I had not written to the Chairman, my evidence would have continued to
languish in some black hole behind the arrass.

All the time we have government servants busily knuckling their foreheads to the interests of the financial
sector and standing in the way of those of us who want to let in a bit of light
to illuminate some grubby dark corners, we shall continue to suffer from these
miscarriages of public administrative justice.

We must await the final
report with great anticipation, but I fear that little will really change very much! If no-one tells the Commissioners what they really need to know, how will they ever find out?

10 comments:

Another great post. It sounds like the investigative process is nothing short of an episode of Yes Minister! Its no surprise to find that public outrage and pertinent evidence continue to be watered down before they can affect any change... just like the banking reforms have. I applaud you for pursing this Rowan. It is the only way in which to make a difference.

Hi Rowan. Great post. I agree with Caroline, above, It is like an episode of 'Yes Minister' but with a very sinister twist.

The only reason your evidence went on 'holiday' can be based on fear that the truth will emerge. What this says about the power of the banks to infiltrate the administration and Parliament is truly scary. The notion that the banks really are in charge is a total abrogation of our democratic rights. As I keep on saying (here and elsewhere) this is not going to be settled in The House but on the streets. If the Cypriot public can push back Merkel, the EU and the IMF then so can the Brits. Meanwhile the latest budget just turns the screw tighter and 'Jo Citizen' pays. I despair. The cruel not to say amusing irony here (Cyprus) is the excuse that they are different as Cyprus is a hotbed of dirty money. Just like the City eh?

The paradox of the financial ombudsman services staff salaries paid by banks springs to my mind! How is any one will believe in such regulatory bodies neutrality or objectivity is frankly beyond me. Still customers are asked to complain to these bodies over and over again, one will think we are in medieval country!

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!